Unit 4 part B

Adam Smith

Father of capitalism; free markets guide the economy

Wealth of Nations (1776)

Book arguing for free markets and capitalism by Adam Smith

Capitalism (market economy)

Private ownership; supply & demand decide prices

Laissez-faire

Little or no government involvement in the economy

Socialism (command economy)

Government owns and controls major industries

Mixed economy

Free market + government regulation

Voluntary trade

Both sides benefit from exchange

Keynesian economic policies

Government spends to fix recessions

Supply-side economic policies

Tax cuts to encourage investment and jobs

Fiscal policy

Government taxes and spending

Monetary policy

Control of money supply and interest rates

Federal Reserve Board

Sets U.S. monetary policy

Social equality

Equal rights and opportunities

Economic equality

Equal income or wealth distribution

Multinational corporations

Businesses operating in multiple countries

Antitrust policy

Laws preventing monopolies

Labor unions & collective bargaining

Workers negotiate wages and conditions

Right-to-work laws

Workers cannot be forced to join unions

Inflation

Rising prices that reduce purchasing power

Unemployment rate

Percentage of workforce without jobs

Federal Reserve System

U.S. central banking system

Keynesian economic theory

The government manages demand

Supply-side economics

Focus on production, not demand

Monetarism

Control inflation by managing money supply

Feminization of poverty

Women more likely to be poor

Earned Income Tax Credit

Tax credit for low-income workers

Health Maintenance Organizations (HMOs)

Managed healthcare limiting choices

Patients Bill of Rights

Guarantees patient protections

National health insurance

Government provides healthcare for all

Medicare

Healthcare for elderly and disabled

Medicaid

Healthcare for low-income individuals

National environmental policy

Federal protection of the environment

Superfund

Cleanup of hazardous waste sites

Environmental impact statement

Environmental review of federal projects

Clean Air Act (1970)

Regulates air pollution

Water Pollution Control Act (1972)

Regulates water pollution

Endangered Species Act (1973)

Protects endangered plants and animals

Environmental Protection Agency (EPA)

Enforces environmental laws

Foreign policy

U.S. strategies toward other nations

United Nations (UN)

International peacekeeping organization

NATO

Collective military defense alliance

European Union (EU)

Economic and political union

Secretary of State

Chief diplomat

Secretary of Defense

Head of the military

Joint Chiefs of Staff

Military advisors to the president

Central Intelligence Agency (CIA)

Collects foreign intelligence

Isolationism

Avoid foreign involvement

Containment doctrine

Stop the spread of communism

Cold War

U.S- Soviet ideological conflict

McCarthyism

Anti-communist hysteria

Arms Race

Competing weapons buildup

Detente

Reduced Cold War tensions

Strategic Defense Initiative (SDI)

Missile defense system proposal

Interdependency

Mutual economic reliance

Tariff

Tax on imports

Balance of Trade

Difference between exports and imports